Which of the following is a tool that the Federal Reserve can use to influence AD?
A) open-market operations
B) lending to banks and other financial institutions
C) changes in reserve requirements and the interest rate paid on reserves
D) Each of these answers is correct.

Question

Quizplus · Accepted Answer

The Federal Reserve can use open market operations to directly manipulate the money supply in the economy, which can in turn impact aggregate demand. Additionally, the Federal Reserve can influence lending and borrowing through its lending programs with banks and other financial institutions, and can also use changes in reserve requirements and interest rates paid on reserves to impact the availability and cost of credit in the economy, which can also impact aggregate demand. Thus, all of these answers are correct.

Which of the Following Is a Tool That the Federal